A one-time weatherman with an instinct for American family values has brought back the good times at Walt Disney, the sprawling entertainment empire that is enjoying a renaissance on Wall Street and in cinema box offices.

Robert Iger, who began his career as a forecaster on a local television channel in New York state, took over as chief executive of Disney in October last year. At the time, vicious infighting and a struggling animation business had cast a cloud over the so-called Magic Kingdom.

Since his arrival, Disney has enjoyed America's two biggest-grossing movies of the year: the digital animation Cars, which has raked in more than $450m (£238m), and the second of the Pirates of the Caribbean series, Dead Man's Chest, grossing more than $1bn.

Disney's ABC is the most watched US television network, a Disney production, High School Musical, is the top-selling CD of the year and even the theme parks, which once appeared tired, have flourished amid promotions to mark Disneyland's 50th anniversary.

The company's shares have rocketed by 42% in 12 months - making them second only to General Motors among Wall Street's top performing blue-chip stocks of the year.

It is a remarkable turnaround for a company that was slammed just a few years ago by Walt Disney's nephew, Roy, as "rapacious, soulless and always looking for the quick buck".

Iger, 54, has a reputation as a likeable, collegiate character in contrast to the polarising charisma of his predecessor, Michael Eisner, to whom he served as number two for five years.

Insiders say he has softened the culture of the 133,000-strong company. "He's created a different management environment," one said. "He's got a management team, as opposed to a set of management subordinates. He's put an emphasis on creating an environment where creativity can flourish."

Disney's $7.4bn acquisition of Steve Jobs's animation studio Pixar, agreed in January, marked a key turning point. Pixar has since provided the smash hit Cars - and the takeover has put paid to doubts about Disney's ability to switch from pen-and-paper cartoons to all-digital production.

Shortly afterwards, Iger announced that Disney's movie arm was to be slimmed down and sharpened in focus to concentrate on family entertainment. Edgy thrillers such as Pulp Fiction - which was made by Disney's Miramax division - are out. A re-release of the Little Mermaid is in. Hundreds of jobs were axed. Furthermore, a deal with Apple to show Disney content on iPods has helped the group re-cast itself as a technological pioneer.

Peace talks with Roy Disney have healed the rift with the founding family. One former executive told the New York Post: "Bob's made that all seem like a distant memory by returning the company to the thinktank-like campus it once was."

Populist announcements have helped improve the company's image. Last month, Disney declared it intended to cut all ties with unhealthy food. The Incredibles and Nemo will no longer encourage children to eat hamburgers and sugary sweets - although they may, says a spokesman, still help sell healthier items at fast-food chains.

The changes are clear in Disney's bottom line. Net profits for the year to September jumped 33% to $3.37bn. The biggest improvement came from films, where earnings leapt from $207m to $729m. But theme parks rose 30% to $1.53bn, helped by a new Hong Kong Disneyland and two hikes in entry prices.

The group's media networks turned in a healthy 11% rise in revenue to $14.6bn, aided by hits such as Desperate Housewives, Grey's Anatomy and Monday Night Football. Even consumer products, such as Disney souvenirs, posted a 14% rise in operating profit to $618m.

There are still plenty of challenges. Richard Greenfield, an analyst at New York-based Pali Research, says per-capita spending at Disney World shows signs of underlying weakness and a lack of hotel rooms could begin to tell. Furthermore, an important negotiation is coming up to renew Comcast's deal to carry Disney's ESPN sports network.

In a recent research note, Greenfield added that Disney's venture into mobile telephones - with a feature allowing parents to track their offspring electronically - is looking wobbly: "We never understood ESPN mobile and we do not understand Disney Mobile. With all the major cellular carriers offering child locator features, we wonder how committed Disney is to being in the cellular business, particularly as losses begin to mount."

This year will be a tough act to follow for Disney but Iger has some more tricks up his sleeve. The company has high hopes for the next Pixar animation, Ratatouille, which will open in the summer. Then there is the third instalment of Pirates of the Caribbean, At World's End. For the Magic Kingdom, the sun shines on.

A coup in the Magic Kingdom

An awkward era for the Disney empire began in 2003, when Walt Disney's nephew, Roy, resigned with a blistering attack on the company for losing "its focus, its creative energy and its heritage".

The 76-year-old began a "Save Disney" campaign to remove the then chief executive, Michael Eisner, who was accused of presiding over box-office flops, a declining ABC network and a cost-cutting programme that left theme parks looking scruffy.

As the damaging battle raged, Disney's shares turned downwards and creativity suffered - few remember films such as Home on the Range and Brother Bear. Adding to the distraction, a shareholder lawsuit raged over an eye-watering $140m (£74m) severance package provided in 1996 to Michael Ovitz, who ran the company for only 16 months before being ousted. The litigation was resolved only when a judge ruled in Disney's favour last year.

After weathering Roy Disney's attacks for more than 18 months, Eisner finally retired last year and the firm picked his long-serving deputy, Robert Iger, below, as a successor. The founder's nephew chimed in once more, declaring that the recruitment process had been a sham and that Iger was merely Eisner's clone.

Diplomacy, patience and a declaration of independence from Iger have finally healed the rift - and the Disney family appears once more to be united.